Fuelwood is an integral part of the Papua New Guinea domestic economy, with consumption estimated at 1.8 m3 person–1 year–1. Social stress in many districts is evident by high prices for and the conflict generated by competition for fuelwood. This paper describes three related activities designed to develop small businesses based on short-rotation coppice (SRC) agroforestry systems for fuelwood. These activities are: 1) a survey of domestic fuelwood consumers and vendors (n = 4110) in fuelwood-stressed districts in urban and rural areas of lowlands and highlands; 2) field trials of ten candidate SRC species, at two spacings, in 2–3 year rotations, with measurements of wood volume after two years, coppice vigour, burning characteristics, and market acceptance; and 3) facilitating the establishment of SRC-grown charcoal businesses. The survey found the fuelwood economy has a very short, direct supply chain in a completely informal environment. This paper summarises the fuelwood economy and illustrates the opportunity to create a new fuelwood supply chain that could deliver sustainably harvested and value-added fuelwood to consumers, especially in urban areas and the commercial sector. The SRC systems appealed to landholders because they could intercrop vegetables in the first year, and had the option of carrying over some trees to grow on to poles. The best SRC woodlot species were Eucalyptus grandis for the highlands and E. tereticornis for the lowlands. Calliandra calothrysus is also a suitable SRC species for alley systems in highland gardens. In the highlands, SRC firewood and charcoal production yield higher estimated returns to labour (43 and 24 PNG Kina person–1 day–1, equivalent to $US 20–11 person–1 day–1) compared with the main alternative crops of sweet potato and coffee (21 and 15 Kina person–1 day–1 respectively). As SRC-grown wood appears different from the normal, wild-collected wood for sale, there was resistance to it in the market. As a value-adding option, the establishment of charcoal producer groups was facilitated in Mt Hagen and Lae. The group business structures in the two centres were very different, reflecting their socio-cultural contexts. A flourishing SRC-based biomass energy sector will require a multi-sectoral national fuelwood policy.